Realtor sees no basis to expect bounce in property prices

An executive at a regional real estate agency foresees that real estate prices will remain low despite the expectation of better tourism prospects.

The government recently announced two tourism-related policies to be expected in late October: the resumption of mainland group tours to Macau and a travel endorsement digital application. 

Nonetheless, John Ng, principal regional sales director at Centaline Property, told a press conference yesterday that the two policies would have limited effect on the real estate market.

The main reason for this prediction is the less-than-ideal external factors such as increasing interest levels, plunging stock prices, military and political crises, as well as an unclear employment future.

Given these factors, the realtor suggests prospective buyers exercise caution while making their decisions.

While reviewing the past quarter, the realtor highlighted that in August and September, the performance of the market did not revive to the expected levels. Both prices and quantity of transacted properties have fallen quarter-to-quarter.

Data from the Financial Services Bureau showed that there were only 128 transactions in July and 157 in August. Property prices have steadily fallen by 2 to 3% in the past two months. An estimated average price per square foot is HKD6,195, the realtor added.

August saw a reinvigoration of the lease market as external students were in the search of accommodation in Macau. The realtor estimated that there would be 300 leases in August and 200 in September. However, rental is still about 30% lower, year-over-year.

Developers, meanwhile, have started reconsidering their strategies, transforming their projects from sale-oriented to lease-oriented. This shift in focus has thus far proven reasonable, as a lease-oriented project on Guia Hill mid-levels saw a sweep in contract conclusions.

With regard to commercial properties, Roy Ho, director for Macau and Hengqin at Centaline Property, has similar expectations to Ng on the outlook of the market. 

Recapping the commercial real estate market in the last quarter, the realtor pointed out that the June 18 Covid-19 outbreak and the de-facto lockdown in July has significantly affected the market, as only 12 transactions were recorded in July, a new low in recent years.

In contrast to July, transactions quickly increased in August and September, with an estimated 25 and 30 transactions for each month respectively. The estimate for the third quarter is 67 transactions, which will be similar to the number in the second quarter.

Ho emphasized that the revivals were led by first and second-tier street shops, although price drops were widely present as previous owners lost patience as they could not see a clear outlook. The same rate of sales, nonetheless, did not occur in lower-tier shops. Ho said that not many deals were closed even as sellers became willing to shrink the price tags.

In terms of shop leases, all closed deals occurred in civilian districts. Ho expects that more deals will be made when the two tourism policies kick in.

There will not be many deals closed in both the office and industrial spaces market, Ho added.

Discussing Hengqin, Sam Lam, district deputy general manager at Centaline Hengqin, revealed that in the third quarter, most deals on the island were made by buyers from Zhuhai, mainly because they are usually more sensitive to mainland policy adjustments than Macau residents.

It has been hinted that by the end of the year, Hengqin will fully become a special taxation area. Some describe Hengqin’s future status as a domestic external location, meaning that it would align further with Macau in certain areas.